Issue Page

Why An Economy for All?

Robert Borosage — Sun, 04 Nov 2007 20:00:05 -0800

Conservatives call it the “greatest story never told,” an economy in which jobs are up, profits are up, stock prices are healthy, productivity is increasing, and inflation is low. In reality, today’s economy is more reminiscent of the Gilded Age. A few people at the top are profiting handsomely, but the myth of a booming economy does not reflect the everyday experience of working class Americans. In fact, most Americans think we are either in or near a recession.

A majority of Americans struggle with stagnant wages and rising costs of living. They see good jobs getting shipped abroad while companies use global competition as a bludgeon to exact cuts in health care, pensions and other benefits for the jobs that are here. For the first time, parents worry that their children won’t be better off than the generation before them. As the housing bubble bursts and millions of Americans face foreclosure on their homes, Americans’ economic situation is only going to get worse.

Our Unsustainable Economy

The state of the national economy mirrors the experiences of working Americans. We’re running record trade deficits and unprecedented foreign debts. Our economy is increasingly dependent on the kindness of strangers, with China and others mercantilist nations lending us the money to buy the goods that they make in the factories our multinationals have built over there.

This cannot be sustained. We’re borrowing or selling off assets at the rate of more than $2 billion a day. But we refuse to use this borrowed money to invest in areas vital to our future prosperity. Falling bridges, collapsing dams, outmoded broadband, slow trains and dangerously crowded airports – the failure to invest adequate in basic infrastructure is becoming a clear and present danger. The education fundamentals — preschool, small classes in early grades, after-school programs, skilled teachers and affordable college—remain vastly underfunded. While other countries pour more and more resources into educating their children, we continue to cut funding for education.

Of course, this economy works very well for the few: CEOs whose salaries have soared from 40 times that of an average worker to 400 times; billionaire hedge fund operators who pay a lower tax rate than their secretaries; multinational corporations and banks that have written the rules of the global economy.

Needed: A Reassessment

Our broad economic strategy – by, for and of the multinational corporations and banks moving across the world –has put most working families in the box they are in. This is a product of policy and power, not the inevitable workings of nature or providence.

We believe we need a far broader reassessment of our global strategy. The global economy that has evolved in the past few decades is now firmly entrenched. Trade is an ever-growing percentage of our economy — much of it intra-corporate exchanges within global conglomerates that have created worldwide networks of production and distribution. Given technology advancements, the realities of global trade and improved international communication, we must reform our economic policies to address the increasingly interconnected and interdependent world economy.

The Challenge

Robert Borosage — Tue, 06 Nov 2007 13:10:04 -0800

Our great challenge in the global economy is to develop a strategy for building a shared prosperity. How do we ensure that the blessings of trade and productivity are widely spread? How do we end the proverbial race to the bottom that has characterized the global economy, with foreign competition being used to undermine worker rights, wages and benefits, and to roll back environmental, consumer and other protections?

Solutions are not easy, and they won’t come on the cheap. Edgy Wall Street bankers, concerned about the growing reaction against our current trade strategy, have begun advocating a patchwork of remedies: an expansion of “trade adjustment assistance” to workers whose jobs are shipped abroad, easier access to training, even “wage insurance” to help in the transition from a good job to one that pays less with fewer benefits after the good job gets shipped abroad. There is no sign that these advocates are prepared to invest anywhere near the resources needed to actually meet this task, but even if they were, mitigating the losses is not an adequate answer.

Conservative Failure

Robert Borosage — Tue, 06 Nov 2007 13:10:04 -0800

The conservatives have had their way. For over a quarter century, American policy has been dominated by conservative ideas, policies and leaders. President Bush’s self-declared "CEO administration" has pushed through tax cuts favoring the rich and corporations, as well as legislation promoting privatization, deregulation and corporate-driven trade policies. They've weakened worker rights at home and abroad, rolled back environmental and consumer protections and locked in massive budget deficits, sticking working families with the bill for far into the future.

The results are working for the elite, those Bush once jokingly called "my base." Corporate profits are up, and CEOs and top management are pocketing record percentages of the take. The average compensation of a CEO in 1980 was about 40 times that of the average worker in the company. In 2005, it was more than 400 times. Taxes on wealth and corporations have been slashed.

Meanwhile, American consumers wake to find their pets poisoned by food imported from abroad and their children endangered by toys with dangerous levels of lead. Rapacious corporations don’t police themselves unless exposed. Corporate lobbies and conservative ideologues have disemboweled public agencies that protect consumers or the environment, at the very moment soaring global imports mandate greater concern and accountability.

Corporate-friendly economic policies and trade deals are cutting workers out of a fair share of the wealth they produce. Productivity has increased, but workers haven't seen the benefits in their paychecks. In 2005, households had to work more hours to pay for three basic expenses — housing, transportation and medical care — than at any point in the past 25 years. Add the cost of day care, because it takes two incomes to keep up with the bills, and it’s a recipe for overstressed families.

Progressive Solution

Robert Borosage — Tue, 06 Nov 2007 13:10:01 -0800

To build shared prosperity, we need to adopt a broad economic strategy that reflects the increasingly global nature of the American economy. Fundamentally, that strategy must empower working families, so that they share in the prosperity and productivity they produce.

Essential elements include:

An industrial policy to capture the core markets of the future, like the new energy economy that can be a source of jobs, innovation and growth.
An investment agenda to provide the capital vital to innovation, to educating and training our people, and to creating the infrastructure that supports a dynamic, competitive economy.
A new social contract designed to insure that working people have access to good jobs, affordable health care, decent pensions and paid vacations. This requires both empowering workers and holding executives accountable, but it also requires developing a public substitute for the private social contract that the companies are now abandoning.

Elevator Speech

Robert Borosage — Tue, 06 Nov 2007 13:10:00 -0800

This economy doesn't work for working people. We have not been creating good jobs here at home to compete in the global economy. Instead, we've given free rein to corporations, cut taxes on the wealthy and reduced protections for workers.

Americans are working harder and getting less for it. Wages are stagnant. Costs for housing, health care and home heating oil have skyrocketed. Millions of Americans are living paycheck-to-paycheck—only a serious illness or personal crisis away from poverty. While CEOs pocket tax cuts, bonuses and stock options, working Americans worry about credit card payments and the price of a tank of gas.

We need to change course, with policies that put people first. We all do better when the benefits of prosperity are widely shared.

We need to make sure work pays a living wage and that children aren't forgotten when both parents are out of the house. We need to invest in areas vital to the future and reclaim the manufacturing prowess that made us the strongest economy in the world. Workers need real enforcement of labor laws so they can organize on the job and get a fair share of the profits they help generate. In an economy of unceasing change, we must ensure that health care and retirement plans are secure and cannot be lost because of a change in jobs. And we have to develop a trade strategy that works for the entire nation, not just for multinational companies.

We must come together to create the rules and policies needed to empower working people. A new economic strategy is necessary to ensure the existence of the middle class glue that holds America together.